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Germany: Schroeder Election Defeat Indicates Reluctance Of Europeans To Accept New, Flexible Economy

German Chancellor Gerhard Schroeder's Social Democrats (SPD) have suffered a major blow with the loss of power in the big industrial state North Rhine Westphalia. After 39 years of continuous rule, the SPD was solidly beaten there yesterday by the opposition Christian Democrats. This is the latest of a series of electoral losses for Schroeder, and the chancellor has decided to confront the danger head on by calling a national election a year ahead of schedule. But Schroeder's dilemma is more than a purely German issue, it also illustrates the reluctance among European Union citizens to adopt the norms of the new economy, namely flexible labor markets and lower welfare benefits.

Prague, 23 May 2005 (RFE/RL) -- German Chancellor Gerhard Schroeder has decided to make a last stand.

As a soon as it was clear his center-left Social Democratic Party (SPD) had lost heavily in yesterday's election in North Rhine Westpahalia, he announced he would seek an early national election, a year ahead of schedule.

"I consider it to be my duty and my responsibility as the chancellor of the Federal Republic of Germany to work toward persuading the President (Horst Koehler) to make use of the possibilities in the constitution to call new elections for the Bundestag as quickly as possible, realistically by autumn 2005," Schroeder said.

The loss of the country's industrial heartland to the conservative Christian Democrats is shattering for the SPD, which has governed North Rhine Westphalia for an unbroken 39 years. The solid working-class majority that the SPD could rely on for so long has disappeared amid discontent over continuing high unemployment and uncertainty over the future.
"The problem as well for the that they have to make clear to the voters that...a reform policy is not based on a sharing out of benefits, but instead demands sacrifice from wide sections of the public."

This was only the latest and most devastating of a string of regional electoral losses by the SPD. As political analyst Peter Zervakis of the Bertelsmann Foundaton puts it, the chancellor had to face the people.

"He had no other choice. There's a German saying that goes: 'A horror with a conclusion is better than a horror without end.' The federal government is a 'lame duck' -- to use the term applied to U.S. presidents -- it has no maneuvering room left," Zervakis said.

The irony of the situation is that German voters are swinging to the right in order to punish the political left for being too liberal.

Schroeder and the SPD have become deeply unpopular with German voters because of their attempt to implement liberal economic reforms in line with the international trend toward globalization. Schroeder acknowledged that the reform package he has been trying to push through needs broad public support -- which he does not have.

"With the bitter election result for my party in North Rhine Westphalia, the political support for our reforms to continue has been called into question. For this continuation, which is necessary in my opinion, a clear support of all Germans is indispensable," Schroeder said.

Zervakis says the electorate is unwilling to concede that the new economic order, with its emphasis on cheap-wage areas and on easy hire-and-fire policies, is putting heavy pressure on the high-wage, high-security German economy.

"The problem as well for the government as for the opposition, is that they have to make clear to the voters that for the first time in the history of the German Federal Republic, a reform policy is not based on a sharing out of benefits, but instead demands sacrifice from wide sections of the public," Zervakis said.

The same basic fear lies behind the difficulties in France of ratifying the European Union's draft constitution, which faces a referendum in France on 29 May.

Surveys indicate the "no" vote is likely to prevail, and one of the most-expressed concerns about the constitution is that it is economically ultraliberal, and will undermine the French welfare state. Several thousand leftists demonstrated in Paris over the weekend to press that view.

Zervakis says this opposition to change is not universal in the EU. The smaller states, like Slovakia and Luxembourg, have found "niches" from which they are turning globalization to their advantage. They are willing to experiment radically.

The same goes for Austria, which is profiting from its proximity to the new Central European member states of the EU. That's despite Austria being originally one of the members most hostile to the enlargement.

Zervakis praises the Swedish model, which retains a strong welfare state while setting clear limits to its dimensions. He suggests that countries that are reluctant to face the hardship of structural reform -- like Germany, France, and Italy -- could well study Sweden's methods for inspiration.